Ricardo Geromel is the managing partner of the Fort Lauderdale Strikers. In his journey to disrupt the beautiful game, his main goals are to win championships and make the Strikers a global reference in innovation. Former Strikers players include George Best, Gerd Muller, Gordon Banks, Elias Figueroa, Nene Cubillas, Ray Hudson and other soccer legends.
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Eike Batista’s fortune continues to shrink. The Brazilian tycoon, worth an estimated $10.6 billion on Forbes 2013 Billionaires list (which used Feb. 14 stock prices) has seen his fortune drop more than $1 billion in a little over a month. Batista controls a troubled empire of commodities and energy businesses through EBX Group, which is comprised of five companies listed on BM&FBovespa’s Novo Mercado – the segment of Brazil‘s stock exchange with the highest standards of corporate governance – whose business is oil (OGX), energy (MPX), logistics (LLX), mining (MMX), offshore oil & gas services (OSX), and many others. His estimated net worth has fallen to just under $9.5 billion, down from $30 billion on February 2012 when he was the world’s seventh richest person. The slump began when OGX reported weak production figures for its first oil wells in June 2012.

Over the weekend Brazilian daily Estadao revealed that Batista’s EBX Group has at least $3.5 billion in debt, nearly all of which is held by his five listed companies mentioned above. The news has unsettled markets, particularly given that EBX Group’s net debt stood below $750 million two years ago. These figures only consider what is publicly displayed in Batista’s listed companies and does not refer to his personal indebtedness. A report from Bloomberg suggests that Batista has been using shares of his publicly traded companies as collateral for loans and trying to reduce collateral requirements by selling assets to pay down debt.

As debt owed by Batista’s listed companies has increased, Batista’s companies have not hit revenue and production targets. OGX announced this week that output from its offshore oil wells fell to 11,300 barrels of oil equivalent a day (bpd) in February, from 13,200 bpd in January. February’s figures were 25 per cent below the 15,000 bpd the company had promised to be a “stabilisation” level for its output, according to an investor note from Banco Bradesco BBI. “This is one more disappointment for the market,” said Ariovaldo Santos, a broker with H Commcor in Sao Paulo. By the same token, iron ore miner MMX announced net loss of $400 million in 2012, 40 times higher than $10 million loss in the previous year, mainly because of MMX’s withdraw of a large investment from Chile. Such news sent MMX shares into a nosedive on Wednesday: stock prices dropped 7.0% at one point, but finally closed down just 0.94% after CEO Carlos Gonzalez explained in a conference that MMX’s flagship Serra Azul iron ore project in Brazil was being expanded. Also helping Batista’s case was Jose Formigli, head of Petrobras’ exploration and production unit, who announced on the same day that the Brazilian oil giant is considering using a port controlled by one of Batista’s companies.

However, the market has been punishing his companies as they fail to deliver. Below is a look at stock performance from 1/1/13 to 3/19/13:

MPX- down 7.44%

OGX- down 42.69%

LLX- down 0.83%

MMX- down 28.99%

Even though EBX group’s enterprises total investment between 2011 and 2012 totaled $ 15.5 billion, according to EBX group’s website , most companies of the group still require large amounts of capital injection to hit production targets. Two weeks ago, Batista unveiled a partnership with one of Latin America’s largest investment banks, BTG Pactual, run by Brazilian billionaire Andre Esteves. The main goal: to attract new partners and fresh capital. The market reacted well and shares in Eike Batista’s companies rallied more than 20% the following day. Last Friday, Brazilian daily Valor Economico reported that Batista was about to sell half of his shares of MPX, the group’s energy arm, to German group E.ON for $961 million. “We think that MPX gains by distancing itself from EBX,” JPMorgan Securities analysts led by Gabriel Salas said in a client note on Tuesday.

From February 2012 through February 2013, Batista’s fortune fell at a rate of $50 million a day. If his fortune continues to disappear at the same pace, he won’t even be on the Forbes Billionaires list next year.

The methodology used to compile Forbes World’s Billionaires List is explained here.

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